Manchester City have agreed to pay £49 million and reduce their squad for the Champions League next season as part of their punishment for violating Financial Fair Play (FFP) rules, in a settlement announced by UEFA on Friday.

The European governing body will limit City to 21 available players in their Champions League squad, instead of the standard 25.

City also agreed not to increase their current wage bill for two years, and to "significantly limit spending" in the transfer market, based on a calculation of their "net transfer position."

The club said on its website that it agreed not to exceed spending £49m in net in the upcoming summer transfer window.

Should City comply with the regulations over the next two seasons, many of the penalties can be ended, and UEFA will return up to £32 million. If, however, City continue to operate in violation of the FFP rules, the squad limitations and other penalties will be extended to the 2015-16 season.

City must show that they have operated at a loss of no more than £16 million for the 2014 financial year (ending May 31, 2015), and no more than £8 million for 2015 for the penalties to be rescinded. The standard acceptable rate of loss to avoid FFP sanctions is £24 million per year.

In a statement released on their website, City insisted they have complied with FFP regulations but revealed they would not pursue the matter further and accepted UEFA's ruling.

"At the heart of those discussions is a fundamental disagreement between the Club's and UEFA's respective interpretations of the FFP regulations on players purchased before 2010. The Club believes it has complied with the FFP regulations on this and all other matters," the statement read.

"In normal circumstances, the club would wish to pursue its case and present its position through every avenue of recourse. However, our decision to do so must be balanced against the practical realities for our fans, for our partners and in the interests of the commercial operations of the club."

City maintained that they were on course to break even at the end of the current financial year that ends this month, and said the spending limits "will have no material impact on the club's planned transfer activity."

In addition to Manchester City, French champions Paris Saint Germain, Turkish club Galatasaray, Russian sides Zenit St Petersburg and Anzhi Makhachkala, and four other clubs have violated FFP rules, according to a Press Association report.

UEFA is close to agreeing settlement offers for sanctions with all nine clubs, according to PA, which reported Manchester City proved the most difficult club with whom to secure an agreement. PSG were made a similar settlement offer to that of City, PA reported.

It is little surprise that Galatasaray, Zenit and Anzhi all failed FFP rules, given the level of spending by the clubs in recent years compared to their income.

That spending caused a financial crisis at Anzhi, who were relegated from the Russian top flight earlier this week.

After enduring a tricky start to his Manchester United career, perhaps it is fair that Marcos Rojo celebrated so boisterously as he watched his first professional club Estudiantes beat fierce rivals Gimnasia